TY  - GEN
AB  - This paper develops a labour market model with on-the-job search, match-specific pro-
ductivity draws and an endogenous irreversible schooling decision. The choice of schooling
is modeled as an optimal stopping problem which gives rise to the equilibrium heterogeneity
of workers with respect to the formal education. The optimal schooling decision is charac-
terized by the reservation productivity of students which is a monotonic function of time.
Moreover, this reservation productivity is lower in expansions when job-to-job mobility is
more intensive. Therefore, the model is compatible with the empirical evidence that expan-
sions have a positive effect on the probability of a school dropout. The schooling density
is downward-sloping and the equilibrium wage distribution is right-skewed with a unique
interior mode. This means that the majority of workers earn wages in the middle range of
the earnings distribution. At the same time there is a small proportion of employees in the
beginning of their career with wages in the left tail of the earnings distribution and a small
proportion of high-skilled workers earning wages in the right tail of the distribution.
DA  - 2013
DO  - 10.4119/unibi/2915428
KW  - Optimal schooling
KW  - uncertainty
KW  - on-the-job search
KW  - wage dispersion
LA  - eng
PY  - 2013
SN  - 2196-2723
SP  - 30-
TI  - On-the-Job Search and Optimal Schooling under Uncertainty and Irreversibility
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29154287
Y2  - 2024-11-24T19:31:24
ER  -